Introduction
Welcome to the beginning of a fascinating expedition through time, tracing the evolution of one of humanity’s most ingenious inventions: money. This tale is not solely about economics; it’s a narrative of connection, commerce, and community building. It’s about grasping our origins to chart the course toward our future—toward the realms of digital currencies and blockchain technology.
In this series, we focus on Blockchain technology. While not money or cryptocurrency itself, blockchain technology was pivotal in the first successful implementation of a decentralized digital currency, Bitcoin (BTC), and remains crucial to most cryptocurrencies.
The Origins of Money
Long before the era of jingling coins and the swiping of credit cards, there was barter – the direct exchange of goods and services. Imagine the simplicity and the complexity of deciding how many goats your neighbour’s sorghum was worth. But as our communities grew and our needs became more sophisticated, the limitations of barter became evident.
The primary challenge with a barter system is what is termed “coincidence of needs.” For example, if you had goats and needed grain, then you had to find somebody with grain who wanted goats. What if they preferred cows? Or what if they want the goats now but will only have the grain at the end of the farming season?
The solution was a universal medium of exchange, leading to the advent of commodity money—items valued both intrinsically and for trade, such as beads, shells, ivory, salt, gold, copper crosses or even metal tools. This was our first step towards abstracting value, making trade more flexible and widespread.
Age of Coinage
The inception of coinage marked a pivotal moment in monetary history. Ancient civilizations began minting coins from precious metals, stamped with official seals to standardize value. This not only standardized values but also bolstered economies by facilitating trade over greater distances. This opened international trade routes such as the Silk Road connecting China with Middle East, Africa, and Europe.
With time however, debasement started, which was a practice of diluting gold or silver with less valuable metals like copper and maintain the face value. This was done by governments and rulers for various reasons, most commonly to stretch the treasury and often worked only for short periods as people would soon start to hoard the good money and transact in the debased (bad) money. This was concisely summarized by Gresham’s Law: “bad money drives out good, if they exchange for the same price”.
From Metal to Paper Money
While coins made from precious metals like gold, silver, and copper had intrinsic value, their physical nature posed limitations. Coins were heavy and cumbersome for large transactions or long-distance trade. Additionally, the need to assay (for purity) and value coins from different regions complicated trade. As economies expanded and trade networks grew more sophisticated, these limitations of coinage became more pronounced, nudging societies towards an alternative form of currency.
The 1st formal issuance of paper currency occurred in China during the Song Dynasty (960–1279 AD). State backed paper money was a revolutionary innovation making trade more efficient and gradually spread along the Silk Road reaching the Middle East, Africa, and eventually Europe. The banknotes were issued by banks as a promise to “pay the bearer on demand the specified amount of gold or silver coins”. This was known as the gold standard.
Many countries suspended the gold standard during World War 1 so they could print more money to finance the War. Some countries tried to return to it after the war but most failed with the UK formally dropping it in 1931 leaving the Pound Sterling with no pounds of silver sterling to back it but simply trust in the issuing authority, the British Empire.
Bretton Woods System
On the eve of the end of 2nd World War, delegates from the Allied Nations met in the Bretton Woods, New Hampshire, United States. This conference aimed to create a new international monetary system in the aftermath of World War II, seeking to avoid the economic disasters that followed World War I, including the Great Depression.
The Bretton Woods conference established a new global monetary system, pegging currencies to the US dollar (reserve currency) and setting the stage for the International Monetary Fund (IMF) and World Bank. This system lasted until the US abandoned gold-dollar convertibility in 1971, ushering in the era of fiat currencies.
Modern Banking and Fiat Currency
The current global standard is fiat currencies, with no intrinsic value (i.e. not backed by anything) and derives its value solely from the authority and declaration of the government that issues it.
Modern money is a form of an IOU (I Owe You) meant to track debt and value through the economy. You will only accept a dollar (IOU) in exchange for your goods or services if you know it will get you goods or services of equivalent value at a later stage and governments guarantee that by designating it legal tender.
The introduction of credit cards, ATMs, and online banking ushered in a new era of convenience, turning money electronic and enabling people to manage and spend their money with unprecedented ease and enabling new industries like eCommerce. Yet, these advancements were just the prelude to a more significant revolution.
The Digital Age and Cryptocurrency
The digital age has brought us to the brink of a new frontier in the story of money. Cryptocurrencies, like Bitcoin, emerged as the first money entirely native to the digital realm—secure, decentralized, and without the need for a central authority.
The magic behind these digital currencies is blockchain technology, a system that allows for secure, transparent transactions without intermediaries, promising not just a new kind of money, but a new way of transacting value itself.
Blockchain – The Technology Behind Cryptocurrencies
Blockchain is more than just the backbone of cryptocurrencies; it’s a new architecture for trust. In a world where transactions can be secure, transparent, and without a central gatekeeper, possibilities for financial inclusion and innovation are vast. From banking the unbanked to creating more equitable financial systems, blockchain technology represents a significant leap forward in the evolution of money.
Looking Forward – The Future of Money
The future of money looks both thrilling and uncertain. Cryptocurrencies and blockchain technology have the potential to redefine our financial systems, but not without challenges. Regulatory hurdles, technological advancements, and societal adoption are just a few of the obstacles that lie ahead. Yet, the journey of money has always been one of innovation and transformation, shaped by our collective needs and dreams.
Conclusion
Money has taken many forms over the years but at the core of it is humanity’s need to transact, store value and account for their wealth. This series explorers blockchain as a new frontier in the innovation of money and how it can be applied with focus on the African continent.
Join us as we delve deeper into the world of cryptocurrencies and blockchain technology, exploring how they’re shaping the future of money. Your thoughts, questions, and stories are welcome here, as we navigate this new digital frontier together.
Simba Chinyani has a background in Actuarial and Financial Maths and is currently a Blockchain Academic, passionate about helping people navigate blockchain and the Decentralized economy.
Contact information: email: csimba362@gmail.com
X (Twitter): @chinyani_simba
53 comments
I think the A Zig article is wat may techzim fans a really waiting for
Yes it has been written at an ideally appropriate time when Zig mari is loading, informing us on the Fiat currency and not to mention the currency based on gold and other royalties, whether we are going forward or we are on a marked boomerang, backsliding into barter trade
I actually thought this was going to culminate in ZiG
According to the article Britain abandoned currency based on the gold standard in 1931 and USA did the same in 1971, other countries had abandoned the gold standard much earlier than Britain and here we are basing the zig in gold right now meaning that with this zig it looks like we are going backwards facing the direction of barter trade.
😂😂😂
What about zig in Zimbabwe
Profound analysis. Indeed times have changed and we’re changing with them
I have a very sensitive question and opinion but please do forgive and tolerate my insolence. Who else finds Techzim to be boring and lacking nowadays? I used to open Techzim twice or thrice everyday looking for content, now i had almost completely forgotten about its existence. Please Techzim, from one or more subscribers, do better and be better.
Impressive and interesting article, well done.
Dankie
Blockchain technology is great, peer to peer promotes openness and inclusion, it’s a great way to manage our societies, cities and nations, it will eliminate most of the corruption we have, the problem is the cryptocurrency part, its more like the fiat currencies we have today, speculation, speculation, speculation it’s value is speculative, it’s the same old story, money is part of this modern day slavery system, money is one of the most cruel injustice ever committed against humans, I believe we need a brand new consciousness, one based on humanity and technology, a post money world, I know we have been conditioned to think a world without money is not possible,
I see you Mr/Mrs writer throwing a jab or two at Zig when you mentioned Gresham’s law”bad money driving out good money” concept and why most countries suspending the gold standard and orlur dear Zim is introducing it in the 21st century…….you really know how to hide behind the walls 🤣
Many thanks for your elaborate account on the gradual evolution of money. I’ve then happened to remember when i was a budding history student when we read about barter trade that existed btn the Shona and the Swahili, the kind of trade at its very inception which was also called “Silent Trade” which was complicated by communication “language barrier ” way back before the arrival of the Portuguese at Sofala. I appreciate your script, thank you.
The ZiG in principle is not a bad concept. It is more aligned to Cryptocurrency than fiat. Technically each 1kg Gold Bullion Bar could be tokenized on a blockchain and subdivided into units the same way we have 1BTC made up of 100mil Sats
The ironically named criminal / Businessman John Law was too early for his time but he is the real father of fiat.
He recognized that a currency is the value BY which we exchange goods and services not FOR which we exchange goods and services hence industrious, yet gold poor countries like Holland had superior economies compared to countries with the biggest gold mines.
Some people personalize maBabe, some personalize an entire nation.
Both sets of people are Tom, DICK and Harry.
For all the Gold we have, all we have to show is a cabinet. Google on how much Gold the empire has underground and in rivers and lakes.
With Bitcoin our sculptures can receive a payment from Asia, America or Europe while grinding. Ship their crate on African Airlines. He Central Bank gets a small commission. Every gets something. Quick efficient. Business. Then they will need to spend that Bitcoin in the local economy, or hold since the price will hit $200,000 per Bitcoin eventually because the coins are not infinity.
Excellent account of the historical journey of the ‘money’ we use today written in just enough detail to easily follow and be informed.
A shot to the heart. It’s a Bon Jovi song at least I think it is. Tafadza kan na ancestors ma investors. Ma dams ese. Mawaya waya💱💎🗿
Chinhoyi 7 volunteers. If you can shoot a .308 from 500 meters and shrED him in the heart. We would be most grateful plus a parson and land to live out your days in peace an comfort.
#ED Sheeran Challenge
#Catles on the hill
Just because Meikles boarder wears glasses doesn’t make him, smart. ⏳👨🏽🏫🚱🤓
Don’t worry zvakarongeka. Mu 2 Lee.
Another mark.
Send me.🙏🏾
If u wah fi do war mi send fidi Army. Bullets are fly like Mr. Miyagi.🥋
There, that’s the handbrake. Ex with extreme prejudice.🔫
Question. How many currencies are we willing to abandon before we say enough is enough? We have become our own worst nightmare, no one else does a better job of destroying Zimbabwe than “vene vayo” . The irony of it all.
Nyika inovakwa nevene vayo is a prophecy. However, many will not want to see it come to light, because they are the gatekeepers.
Good article
What an exceptionally written article explaining the origins & intricacies of the monetary value system 💯.
Valuable insight ..was intrigued by the brief explanation pertaining to the block chain tech. I was inspired to research further on the pivotal role it will play in redefining the architecture of our financial systems.
Thanks for sharing
Thanks. Lookout for more articles on the series.
Thank you for educating me about money, this is a knowledge that I needed.
One question, recently they have been talks around regulating cryptocurrencies, what can the impact be should this take effect?
Regulating crypto defeats the inherent nature of decentralized money. They can ban it,but in actual fact, people still find work around. As long as you have your bitcoins, no one can touch them unless you give them the key.
We cannot expect the same people who dug the hole to dig us out. Now they are going to make a mockery of the Gold standard to prove that it won’t work, as they masters in the West direct.
The Gold standard works, please move over and let others have a turn. You are like a playground bully who doesn’t wait in line, steals other kid’s lunch and does get of the jungle Jim for others to play.
Gaya, kura, ticking time bomb. When the people are finally fed up, there will be no talking, there will be no mercy.
You have been warned.
Conventional banks will not be willing to adopt crypto currency as it will not give them the opportunity to lend money they don’t have. At the moment they just add a figure on your bank balance when a loan is approved. They take advantage of the Reserve Bank’s failure to monitor bank transactions.
With the advent of smart devices, internet and crypto, banking will never be the same. Some might say, it is tow what Kodak was to the digital camera. No one is too big to fail….
Most money is created by Commercial Banks via Credit Issuance. Central Banks have a monopoly on Currency Creation not money creation. Check out this video from the Bank of England: https://www.youtube.com/watch?v=CvRAqR2pAgw
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Trying to buy data. ZiG 60 = 1200MB. Does this mean $1 USD = 60 ZiG before we get to 30 April 2024?
If so, this is not a gold standard, Gold is worth more than USD.
You cannot call something a Gold standard unless you have enough Gold deposits to back it up. Also why not put a platinum strip on our notes and coins with the corresponding value on the note. Theoretically an individual can smelt their note back into platinum while maintaining it’s value, either than that it’s just a piece of paper from an untrusted source, what could go wrong?
Over 55million engaged miners, Number 4 most followed crypto on Twitter and will be number 3 in the next 3 months overtaking eth,
Free to mine/mint on your fone without drawing battery or internet.
Easily accessible and widely used, breaking the barrier of crypto for many people in the world.Follow me @lewiszett 🐦
Thanks a lot Chinyani for the article. I believe a similar article entirely on Zig may help many understand a lot of issues around the currency.
Thanks for the comment, Phiri. The series is about Blockchain and will not be doing anything specific to ZiG. However, the ZiG could infact benefit from Blockchain via tokenization which also adds transparency.
Over 55million engaged miners, Number 4 most followed crypto on Twitter and will be number 3 in the next 3 months overtaking eth,
Free to mine/mint on your fone without drawing battery or internet.
Easily accessible and widely used, breaking the barrier of crypto for many people in the world.Follow me @lewiszett 🐦
Well done Simba
Very informative.
Brilliant article Simba well researched. I’m looking forward to seeing more and will be closely following the series.
If all ZWL was converted to Zig then how is the Zig different from ZWL (except that it just lost some zeros). If govt. was printing ZWL to pay salaries and contractors, then how will this stop simply because the currency is now called Zig? If someone was sitting on 100 billion ZWL that they were trying to convert to USD at parallel market rates, say 1:40,000 which means this ZWL was worth USD2.5 million, then post conversion to Zig, he now has 40 million Zigs which is officially equivalent to USD3 million. Will this person be able to go to the bank and get USD3 million or is he better off trying to look for USD on the parallel market thereby offering a better rate for the USD – the same rate that would earn him his original target of USD2.5 million. My prediction is that the trillions of ZWL that got converted to Zig will mean that the gold reserves backing the Zig are a drop in the ocean and the same problems that caused the ZWL to continuously lose value will be inherited by the Zig. It would have been better to abandon the ZWL and leave the balances in old accounts and start the Zig afresh on new accounts.
An eye opener, especially to those who worry about the ZiG’s introduction but then do not have enough research depth or even dare to do research on it.
Thank you for this article
The ZiG is money and I think Zimbabwe should rightfully have its own money. The conversation should shift from whether we need our own money towards a sustainable design for our national money system. Government should address the “money economics” to ensure it is trusted and not hyperinflationary. Trust and transparency is essential.
We have researched; bearer cheques, bonds, RTGS and now ZiG. The statements and the policies always look good on paper, then the shocking reality of being fleeced again. If they back the ZiG with good economics then we won’t have a problem. We want it to work, but we also see glaring deficiencies by introducing a Gold standard without enough Gold to back in it. Picture the Queen of England walking in a warehouse full of Gold, then picture us smiling with a cabinet from of Gold. Where has all tje Gold gone from the famous land of Orphir. We should have warehouse full of Gold and diamonds.
Air your views:
https://twitter.com/ReserveBankZIM/status/1780225212635562285?t=dvXe4-ryKz-wMAvfGJGXeQ&s=19
Tosh! The ZiG is nonsense, with the biggest and most obvious lie being that it’s ‘backed with gold’
In as much as nobody is promised gold in leui of ZiG, nor does anyone believe or expect they can get gold for their ZiG, then it’s just hot air that it’s backed with.
Not to mention that the monetary statement establishing the ZiG even says that the currency is back by Gold and other precious metals and minerals plus USD – immediately diluting the supposed ‘backing’ assets to much more than just gold.
What’s the point of any backing asset if not to compensate any holder of the currency should it be required?
Hiven the history, people have a reason to be skeptical.
RBZ is running a survey. Raise your concerns with them, hopefully they will consider people’s concerns and suggestions.
https://twitter.com/ReserveBankZIM/status/1780225212635562285?t=dvXe4-ryKz-wMAvfGJGXeQ&s=19
What about zig in Zimbabwe
Insightful, indeed an investment in knowledge pays the best interest, the article definitely added more value to my knowledge of money..